In today’s knowledge economy, creations of the mind can often be more valuable to a business than physical things. If you run a business which depends on creativity (whether on your creativity or the creativity of your employees), then it is important that you take steps to protect any products of this creativity which provide your competitive edge.
Perhaps you have know-how, or work processes which are not commonly known in your industry, or even inventions or designs. It only takes the departure of a single disgruntled employee to take your advantage across to a competitor. Indeed, competitors may head-hunt your employees for this precise purpose. It pays to be prepared for this contingency.
1. Common Law protections:
First of all, if you have not taken any steps to protect your IP, do not panic. Your IP rights may still have the benefit of a limited level of protection. The relationship of employment carries with it certain common law protections that will be implied into any contract of employment, however drafted or expressed.
Most importantly, amongst these is the implied contractual duty of good faith that an employee owes their employer. This will generally include an obligation on an employee to make any intellectual property made in the course of their employment available to their employer.
There are two major factors that will be considered by the courts in determining whether the intellectual property arose in the course of employment:
a. The first question is whether the development occurred during the employee’s hours of work and with your resources, or whether it occurred independently, outside of the workplace.
b. The second question whether the employee is engaged for the purpose of producing such work. For example, if the employee is engaged as a salesperson but creates an invention unrelated to their role whilst employed, it may be difficult to allege that this invention belongs to the company, notwithstanding the fact that it was created on the company’s time.
Assuming these questions are answered in the Employer’s favour, then a court would consider the extent to which the employer should maintain control over the IP following the employee’s departure from the business.
2. Contractual protections:
The Common Law protections described above rely to a significant degree on the factual circumstances of each individual matter, over which you as the Employer may have little or no control. An employee might say that he did the work on his own time. He might say that the invention was his before he started his employment. He might say a thousand things which are contrary to your interests. Unless you have evidence to contradict what he says, you are unlikely to be successful in court. It is far better to avoid this whole messy argument, and rely instead on Contractual protection.
A properly drafted contract governing IP will provide clear and concise terms which express unambiguous protections for intellectual property produced or created by employees while employed by you. Such a contract removes all of the uncertainty involved in relying on the Common Law protection, and places you as the employer in the position of power.
If you are concerned that your employment contracts may not properly protect your IP, we would be pleased to discuss the options that are available to you. If your business relies upon its IP, then it is worth a single consultation with us to ensure that you have the highest level of protection. Please contact any member of our employment team on 9411 4466.